Literature Review: The Impact of Globalization on Organizational Development and Change.
For the purpose of this literature review, the following Problem Statement will be deliberated upon: What is the Impact of Globalization on organizational development and change?
In this regard, two sub-problems and their respective hypotheses have been identified. An examination of related resources has brought to light a number of theoretical perspectives and research findings which have been evaluated, described and synthesized hereunder.
HYPOTHESIS 1: Better relations between countries.
The effects of globalization on the world been the subject of innumerable studies, quantitative as well as qualitative and while earlier academic discourse focused on its political ramifications, recent studies are aimed at disclosing its impact on world economy and international relations. According to Akram et.al (2011) globalization has created a new business sense by creating a border free world economy.
Fairooz (2013) discusses the impact of globalization on developing nations and maintains that it has enabled developing nations access the markets in the first world thus improving living standards to some extent. An earlier empirical study by Edwards (1998) demonstrated through an index of several countries how trade impacts economies and economic globalization fosters rapid economic growth. One factor that greatly fosters this growth is the increase in foreign direct investment (FDI). Samimi and Jenatabadi (2014) in their study on OIC countries demonstrated how financial openness in the form of FDI contributes to the betterment of human capital in host nations.
Further, that globalization has created a symbiotic relationship between developed and developing nations, was also discussed by Thirlwall (2003) who pointed out that "Developing countries depend on developed countries for resource flows and technology, but developed countries depend heavily on developing countries for raw materials, food and oil, and as markets for industrial goods". In agreement to which Fairooz (2013) concluded, “globalization has made the relationships between developed countries and developing nations stronger”, also making them more interdependent.
Interestingly, in agreement with theoretical discourse, which maintains that globalization enhances economic growth by allocating resources more efficiently, empirical evidence also suggests that globalization promotes better international relations and also works in a symbiotic way to foster development across economic strata. The study carried out by Samimi and Jenatabadi (2014) investigated the effect of economic globalization on economic growth in OIC countries and provided evidence which suggests that economic globalization has statistically significant impact on economic growth. “The results indicate that this positive effect is increased in the countries with better-educated workers and well-developed financial systems” (p. 4). Further they demonstrated that the effect of economic globalization also depends on a country’s level of income with high and middle income countries benefiting more than low income countries. Earlier Dreher (2006) came up with a new comprehensive index of Globalization to study the impact of globalization showing that globalization promotes economic growth and reached similar conclusions about the level of income of nations, with poor nation being worst affected by economic crises.
Kilic (2015) carried out a Panel Data Analysis for the growth levels of developing countries by the fixed effects least squares method and Granger causality. It was found that between 1981-2011, 74 developing countries were positively affected by the economic and political globalization whereas social globalization hampered economic growth.
Akram et.al (2011) while studying the impact of globalization on world economic development, maintain that the ever increasing volume of goods, services and investments was rendering national borders insignificant and focused on studying hoe it is affecting the International Trade, FDI, and Economic Developments of the fastest growing industries of World.
Undoubtedly, in all this the internet which is the hallmark of the I.T. revolution has been identified as a key factor. According to Borkuch et.al (2012) “Internet is perhaps the most visible aspect of globalization and in many ways its driving force”. Atkinson (2009) attributes the success of economic globalization to Information technology, without which it would have never been successful. By transforming the internal operations of organizations and transactions between organizations the internet has been instrumental in enabling the emergence of a globalised economy (Mckinsey report, 2011).
SUBPROBLEM 2: What are the impacts of globalization on economy?
HYPOTHESIS 2: New technological inventions
Several studies, many of them empirical, have explored the far reaching impact of globalization on the economies of developing nations, the way it shapes relationships between the first and third world and manner in which technology shapes and gets shaped in this scenario. Stever and Muroyama (1988) put forth the effects of technological transformations on the global economic structure in their edited compilation. They maintained that it was globalization that was pushing technology towards major transformations in industries such as manufacturing, construction and communications. J Lau (2015) reiterates the point by referring to the De-Verticalization or Fragmentation of Production.
Shangquan (2000) prophesized that Economic globalization is an irreversible trend marked by industrial restructuring and readjustment that has manifested in the form of mergers and acquisitions. As developed economies drift towards becoming knowledge economies a cross-country shift is witnessed. This is what Colombo (1988) termed as a “dematerialization” of society where fewer materials are now needed to achieve an economic target, in turn shaping technology towards a desired end. All of these factors contribute towards growing competition which has a tremendous implication on technology and innovation. Further, Samimi and Jenatabadi (2014) showed that in open economies FDI brings along the knowledge and managerial skills needed for implementing new technology.
References
Parisa S., Hashem S. J, Rodrigo Huerta-Quintanilla (2011).. Globalization and Economic Growth: Empirical Evidence on the Role of Complementarities PLoS One. 2014; 9(4), pp. 4-8.
M. Akram Ch., M. A. Faheem, M. K. Bin Dost, I. Abdullah (2011). Globalization and its Impacts on the World Economic Development International Journal of Business and Social Science Vol. 2 No. 23 [Special Issue – December 2011] 291 Retreived from www.ijbssnet.com/journals/Vol_2_No_23_Special_Issue_December_2011/36.pdf
Cuneyt Kilic, (2015) Effects of Globalization on Economic Growth: Panel Data Analysis for Developing Countries. Economic Insights – Trends and Challenges Vol.4 No. 1/2015 (pp. 1 – 11) Retreived from http://www.upg-bulletin-se.ro/archive/2015-1/1.Kilic.pdf on April 22, 2016
A. Borcuch, M. Piłat-Borcuch, U. Świerczyńska-Kaczor (2012). The Influence of the Internet on globalization process. Journal of Economics and Business Research, ISSN: 2068 - 3537, E – ISSN (online) 2069 – 9476, ISSN – L = 2068 – 3537 Year XVIII, No. 1, 2012, pp. 118-129
S. Edwards (1998). Openness, productivity and growth: what do we really know? Economic Journal 108: 383–398.
Fairooz Mustafa Hamdi(2013). The Impact of Globalization in the Developing Countries. Developing Country Studies www.iiste.org ISSN 2224-607X (Paper) ISSN 2225-0565 (Online) Vol.3, No.11, 2013 142
Books
Thirlwall. A. P. (2003), "Growth & Development with special reference to developing economies", (7th ed). Palgrave Macmillan: New York.
Dreher A, Gaston N, Martens P (2008) Measuring globalisation: Gauging its consequences: Springer Verlag.
Atkinson, Robert (2009), Chapter 9, s“Globalization, New Technology and Economic Transformation,” in O. Cramme and P. Diamond (eds), Social Justice in the Global Age. London: Policy Network. www.itif.org/files/Atkinson_chapter.pdf
Report
Report McKinsey Global Institute October 2011 The great transformer: The impact of the Internet on economic growth and prosperity By James Manyika, Charles Roxburgh www.mckinsey.com/industries/high-tech/our-insights/the-great-transformer
Power point Presentation
Lawrence J. Lau (2015). Economic Globalization and the Information Technology Revolution, Kwoh-Ting Li Professor of Economic Development Department of Economics Stanford University www.web.stanford.edu/~ljlau/Presentations/Presentations/CPPCC.PDF
Conference Papers
Gao Shangquan (2000). Economic Globalization: Trends, Risks and Risk Prevention CDP Background Paper No. 1 ST/ESA/2000/CDP/1 Accessed from www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf on 22 April, 2016
Janet H.Muroyama and H.Guyford Stever, Editors Globalization of Technology: International Perspectives. Washington, DC: The National Academies Press, 1988. www.nap.edu/read/1101/chapter/2
Uberto Colombo, "The Technology Revolution and the Restructuring of the Global Economy." National Research Council. Globalization of Technology: International Perspectives. Washington, DC: The National Academies Press, 1988. doi:10.17226/1101.
